Banking Strategy

Welcome to the Banking Strategy module. The world of banking has changed considerably in recent years, particularly since the crisis of 2007–09. This module aims to give you a good understanding of the characteristics of the financial system and the role of intermediation, as well as the implications of recent structural changes for bank management and external corporate control. You will learn about banks’ sources of funding and how the environment after the 2007–09 crisis transformed their funding choices.

The module also aims to provide an analysis of the factors that can contribute to success or failure in the execution of banks’ mergers and acquisitions (M&A) transactions, and the cultural challenges that may be crucial to the success of an M&A deal involving banks. We hope that your study of the module will enable you to evaluate the business strategy and implementation failings that have given rise to bank failure and to assess the benefits and costs from regulation of the financial services industry, and the net regulatory burden faced by the banking industry.

Learning outcomes

When you have completed your study of this course, you will be able to:

• analyse the particular risks banks are exposed to as a direct result of the intermediation process
• assess the degree to which a bank's strategy may lead to an optimal level of risk, for the bank and for the financial system as a whole
• describe the financial intermediation linkages in a financial system
• analyse patterns of structural change and strategic positioning over cycles of globalisation, deregulation and consolidation
• describe the sources of funding for banks and discuss how they affect banks' profitability and risk
• explain the sources of risk facing banks
• discuss the changing nature of risks facing banks in emerging economies
• explain the causes of the global financial crisis of 2007–09, identifying the features that were unique to this crisis, and those that are common to other crises
• analyse the business models which made some banks especially vulnerable in that crisis
• consider the strategic implications for banks of the regulatory environment.

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 6, and the second assignment at the end of the module, on the Tuesday after Week 10. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in July each year.

Study resources

• Study guide: The module study guide is carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the assigned readings.
• Key texts: Smith RC, I Walter & G DeLong (2012) Global Banking. 3rd Edition. Oxford University Press.
• Readings: Throughout the module you will be directed to study a selection of readings, including journal articles, book extracts and case studies that are of particular relevance and interest to the topics covered in the module.
• Virtual learning environment: You will have access to the VLE, a web-accessed study centre. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Study calendar 2022/23

Study calendars are subject to change.

Module overview

Unit 1 Financial Intermediation – Dynamics and Governance Mechanisms

• 1.1 Introduction
• 1.2 Review of Financial Institutions and Systems
• 1.3 Governance Mechanisms
• 1.4 Core Incentive Problems and the Breakdown of Corporate Governance
• 1.5 Case Study
• 1.6 Conclusions

Unit 2 Strategic Drivers of Structural Change in Global Banking

• 2.1 Introduction
• 2.2 Financial Intermediation Dynamics
• 2.3 Structural Change in Global Banking
• 2.4 The Basics of Banking Strategies – A Simple Strategic Schematic
• 2.5 Drivers of Strategic Strengths and Weakness
• 2.6 Case Study
• 2.7 Conclusion

Unit 3 Strategy and Strategic Positioning

• 3.1 Introduction
• 3.2 A Tool for Strategic Thinking – The C-A-P Model
• 3.3 Globalisation, Regulation and Consolidation
• 3.4 Specialist versus Universal Banks
• 3.5 Sources of Competitive Advantage
• 3.6 Strategic Choices
• 3.7 Case Study
• 3.8 Conclusion

Unit 4 Acquisition and Use of Funds

• 4.1 Introduction
• 4.2 Sources of Bank Funding
• 4.3 Disintermediation and Competition from Non-bank Participants
• 4.4 Funding Models Before, During and After the 2007–09 Crisis
• 4.5 Case Study
• 4.6 Conclusion

Unit 5 Banks' International M&A Deals

• 5.1 Introduction
• 5.2 Reasons for M&A Transactions
• 5.3 Consequences of M&A Transactions
• 5.4 Financing M&A Transactions
• 5.5 Case Studies
• 5.6 Feedback on the Case Studies
• 5.7 Conclusion

Unit 6 Managing Bank Risk

• 6.1 Introduction
• 6.2 Risks Facing Banks
• 6.3 Management of Bank Risks
• 6.4 The Changing Nature of the Risks Facing Banks
• 6.5 Case Studies
• 6.6 Feedback on the Case Studies
• 6.7 Conclusions

Unit 7 Business Models and Systemic Risk

• 7.1 Introduction
• 7.2 Financial Crisis
• 7.3 Business Models
• 7.4 Risk Management Lessons from the 2007–09 Financial Crisis
• 7.5 The Future Shape of Banks
• 7.6 Case Studies
• 7.7 Feedback on the Case Studies
• 7.8 Conclusion

Unit 8 Dealing with Regulatory and Compliance Issues

• 8.1 Introduction
• 8.2 Contradictions and Trade-Offs in Regulation
• 8.3 Regulatory Options
• 8.4 Financial and Market Supervision
• 8.5 Regulation after 2007–09
• 8.6 Case Study
• 8.7 Conclusion

Module samples

• M466 Module Introduction (PDF)
• M466 Specimen Examination (PDF)
• M466 Unit 1 (PDF)

Disclaimer

Important notice regarding changes to programmes and modules